Question

Rick Hall owns a card shop, Hall’s Cards. The following cash information is available for the month of August Year 1:

As of August 31, the bank statement shows a balance of $12,730. The August 31 unadjusted balance in the Cash account of Hall’s Cards is $9,572. A review of the bank statement revealed the following information:

1. A deposit of $1,800 on August 31, Year 1, does not appear on the August bank statement.
2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $2,225 but was recorded on the books as $3,125.
3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,135 were found to be outstanding.
4. A debit memo for $77 was included in the bank statement for the purchase of a new supply of checks.

Required

Prepare a bank reconciliation at the end of August showing the true cash balance.

Answer 1

Rick Hall
BANK RECONCILATION
August 31,
Unadjusted Bank Balance,August 31,	12730
Add:deposit in Transit	1800
Less:Outstanding Checks	-4135
True Cash Balance ,August 31	10395
Unadjusted Book Balance,August 31	9572
Add Error in recording check for inventory(3125-2225)	900
Less Debit Memo of new checks	-77
True Cash Balance ,August 31	10395